Back in December of 2009, my father,
Sanford K. Okura, wrote an excellent article titled “Tenants by the Entirety.”
It explained the pros and cons of holding property as “tenants by the entirety”
as opposed to holding them in revocable trust(s). At the time, tenants by the entirety
protection was only available for property owned directly by married couples or
registered reciprocal beneficiaries.

The main benefit of owning property as
tenants by the entirety is to protect your assets from lawsuits. Even if a
creditor wins a lawsuit against one spouse or reciprocal beneficiary, the
property is protected from the creditor. The creditor must have a claim and win
a lawsuit against both spouses or
reciprocal beneficiaries in order to take the property away from the couple or
reciprocal beneficiaries.

In 2012, I wrote an article titled
“Tenants by the Entirety Protection Available in Trust.” I explained how owning
property in a revocable trust traditionally had other benefits that differed
from the creditor protection advantages of owning property as tenants by the
entirety. These advantages include avoiding probate even when the second spouse
dies, avoiding conservatorship in the event of incapacity of either spouse,
keeping assets in the family after both spouses pass away and minimizing estate
taxes with the use of A-B revocable trusts. This often left married (or
reciprocal beneficiary) estate planning clients unsure of whether to take
advantage of the benefits provided by the revocable trust or stay with the
safety and creditor protection of keeping their real estate in their names as
tenants by the entirety. The then-relatively new law allowed married couples
and reciprocal beneficiaries in Hawai‘i to put their real property in trust
while retaining the creditor protection benefits of tenants by the entirety
laws.

It is quite common for married clients
to seek our assistance in doing estate planning with their home and other real
property already owned as tenants by the entirety. However, I rarely see
married couples that own personal property as tenants by the entirety. Many
people are not aware that in Hawai‘i, intangible personal property, such as
corporate stocks and bonds, LLC membership interests and even bank accounts can
also be owned as tenants by the entirety. In some states, only real estate can
be owned as tenants by the entirety. In other states, only “Homestead Property”
qualifies. Some states do not have tenants by the entirety protection at all.

Married couples who own financial
institution accounts jointly with rights of survivorship might be wiser to own
the accounts as tenants by the entirety. Some banks do not allow holding
accounts as tenants by the entirety, even though it is legal in Hawai‘i.

Hawai‘i Revised Statutes Section
509-2(a) is the actual code section that permits land or any other type of
property to be held as tenants by the entirety. An interesting point about this
code section is that it was actually written to abolish an inconvenient common
law rule referred to as “the Straw Man.”

Under old English Common Law, the
transfer of real property to joint owners required “Four Unities” in order to
establish a valid joint tenancy with rights of survivorship (or the more
protected status of tenants by the entirety for married couples). One of these
requirements was the “Unity of Time,” meaning that the joint owners must
receive their interest in the property at the same time. So, if one person
already owned the property and wanted to add another person as a joint tenant,
the original owner had to transfer his ownership to a “straw man” (a third
party), who could then transfer it back to the original owner together with the
new joint owner at the same time. This extra step would then satisfy the
requirement of Unity of Time.

HRS Section 509-2(a) was written to
specifically eliminate the requirement of a “straw man” by allowing the original
owner to transfer the property to him or herself and the new joint owner(s)
without temporarily putting it in someone else’s name first who could transfer
it to them at the same time. Thankfully, legislators also specifically included
“any other property” as being eligible for tenants by the entirety treatment,
not just real property or one homestead property.

If you need help in determining
whether your real or personal property is held as tenants by the entirety, or in
setting up your estate so that your assets are protected from creditors, please
see a qualified attorney for a personal assessment and recommendations specific
to your situation.

Share this entry

https://okuralaw.com/wp-content/uploads/2015/08/logo-4001-blue-300x75.png00michellehttps://okuralaw.com/wp-content/uploads/2015/08/logo-4001-blue-300x75.pngmichelle2019-03-11 17:18:522019-03-11 17:18:55TENANTS BY THE ENTIRETY FOR PERSONAL PROPERTY

Successfully RSVP-ed for Event Name

Successfully updated RSVP for Event Name

{"codes":{"err":"Required fields missing","err2":"Invalid email address","err3":"Please select RSVP option","err4":"Could not update RSVP, please contact us.","err5":"Could not find RSVP, please try again.","err6":"Invalid Validation code.","err7":"Could not create a RSVP please try later.","err8":"You can only RSVP once for this event.","err9":"Your party size exceed available space.","err10":"Your party size exceed allowed space per RSVP.","succ":"Thank you for submitting your rsvp","succ_n":"Sorry to hear you are not going to make it to our event.","succ_m":"Thank you for updating your rsvp","succ_c":"Great! we found your RSVP!"}}